QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934

For the
quarterly period ended June 30, 2019

[ ]

TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the
transition period from __________ to ___________

Commission
file number: 333-222094

TPT Global Tech, Inc.

(Exact
name of registrant as specified in its charter)

Florida

81-3903357

State
or other jurisdiction of incorporation or organization

(I.R.S.
Employer Identification No.)

501 West Broadway, Suite 800

San Diego, CA

92101

(Address
of principal executive offices)

(Zip
Code)

(619) 301-4200

Registrant’s
telephone number, including area code

______________________________________

(Former
Address and phone of principal executive offices)

Securities
registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

---

---

---

Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and
(2) has been subject to the filing requirements for the past 90
days.

Yes

[X]

No

[ ]

Indicate
by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to
Rule 405 for Regulation S-T (§232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).

Yes

[X]

No

[ ]

Indicate
by check mark whether the registrant is a large accelerated file,
an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange
Act.

Large
accelerated filer

[
]

Accelerated
filer

[
]

Non-accelerated
filer

[X]

Smaller
reporting company

[X]

Emerging
growth company

[X]

If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided to
Section 7(a)(2)(B) of the Securities Act. [ ]

Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).

Yes

[ ]

No

[X]

Indicate
the number of shares outstanding of each of the issuer’s
classes of common stock, as of the latest practicable
date.

As of
August 19, 2019, there were 136,953,904 shares of the
registrant’s common stock, $.001 par value, issued and
outstanding.

Explanatory
Note

During the three
months ended June 30, 2019, the Company failed to file a Form S-1
registering common shares underlying certain convertible debt
instruments. This was considered a default under the applicable
Securities Purchase Agreements resulting in different valuations of
the convertible debt instruments for accounting purposes as of June
30, 2019. Thus, several numbers within these financial statements
change significantly. Note 12 to the condensed financial statements
explains in detail the numbers that change and to what extent. In
addition to Note 12 and the discussion there in, there are changes
to Notes 1, 2, 3, 5, 6 and 8 to the condensed consolidated
financial statements.

NOTE
1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

Nature
of Operations

The
Company was originally incorporated in 1988 in the state of
Florida. TPT Global, Inc., a Nevada corporation formed in June
2014, merged with Ally Pharma US, Inc., a Florida corporation,
(“Ally Pharma”, formerly known as Gold Royalty
Corporation) in a “reverse merger” wherein Ally Pharma
issued 110,000,000 shares of Common Stock, or 80% ownership, to the
owners of TPT Global, Inc. in exchange for all outstanding common
stock of TPT Global Inc. and Ally Pharma agreed to change its name
to TPT Global Tech, Inc. (jointly referred to as “the
Company” or “TPTG”).

The
following acquisitions have resulted in entities which have been
consolidated into TPTG. In 2014 the Company acquired all the assets
of K Telecom and Wireless LLC (“K Telecom”) and Global
Telecom International LLC (“Global Telecom”). Effective
January 31, 2015, TPTG completed its acquisition of 100% of the
outstanding stock of Copperhead Digital Holdings, Inc.
(“Copperhead Digital”) and Subsidiaries, TruCom, LLC
(“TruCom”), Nevada Utilities, Inc. (“Nevada
Utilities”) and CityNet Arizona, LLC (“CityNet”).
Effective September 30, 2016, the company acquired 100% ownership
in San Diego Media Inc. (“SDM”). In October 2017, we
entered into agreements to acquire Blue Collar, Inc. (“Blue
Collar”) which closed as of September 1, 2018. On May 7, 2019
we completed the acquisition of a majority of the assets of
SpeedConnect, LLC, which assets were conveyed into our wholly owned
subsidiary TPT SpeedConnect, LLC (“TPT SC” or
“TPT SpeedConnect”) which was formed on
April 16, 2019.

We are
based in San Diego, California, and operate as a Media Content Hub
for Domestic and International syndication
Technology/Telecommunications company operating on our own
proprietary Global Digital Media TV and Telecommunications
infrastructure platform and also provide technology solutions to
businesses domestically and worldwide. We are a rural Broadband
Wireless Access (BWA) provider, Software as a Service (SaaS),
Technology Platform as a Service (PAAS), Cloud-based Unified
Communication as a Service (UCaaS) and carrier-grade performance
and support for businesses over our private IP MPLS fiber and
wireless network in the United States. Our cloud-based UCaaS
services allow businesses of any size to enjoy all the latest
voice, data, media and collaboration features in today's global
technology markets. We also operate as a Master Distributor for
Nationwide Mobile Virtual network Operators (MVNO) and Independent
Sales Organization (ISO) as a Master Distributor for Pre-Paid
Cellphone services, Mobile phones, Cellphone Accessories and Global
Roaming Cellphones. In addition, we create media marketing
materials and content.

Basis
of Presentation

The
accompanying unaudited condensed consolidated financial statements
have been prepared according to the instructions to Form 10-Q and
Section 210.8-03(b) of Regulation S-X of the Securities and
Exchange Commission (“SEC”) and, therefore, certain
information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles
generally accepted in the United States of America
(“GAAP”) have been omitted.

In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the six months ended June
30, 2019 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2019.

These
condensed consolidated financial statements should be read in
conjunction with the Company’s consolidated financial
statements for the year ended December 31, 2018. The condensed
consolidated balance sheet at June 30, 2019, has been derived from
the consolidated financial statements at that date, but does not
include all of the information and footnotes required by
GAAP.

On
January 1, 2018, we adopted the new accounting standard ASC
606, Revenue from Contracts
with Customers, and all of the related amendments
(“new revenue standard”). We recorded the change, which
was immaterial, related to adopting the new revenue standard using
the modified retrospective method. Under this method, we recognized
the cumulative effect of initially applying the new revenue
standard as an adjustment to the opening balance of retained
earnings. This results in no restatement of prior periods, which
continue to be reported under the accounting standards in effect
for those periods. We expect the impact of the adoption of the new
revenue standard to continue to be immaterial on an ongoing basis.
We have applied the new revenue standard to all contracts as of the
date of initial application.

The
Company’s revenue generation for the last two years came from
the following sources, which sources are explained in detail
below.

For the six months
ended June 30, 2019

For the six months
ended June 30, 2018

TPT
SpeedConnect

$1,946,820

$ —

Copperhead
Digital

128,130

224,454

K
Telecom

33,769

78,430

San Diego
Media

17,165

114,257

Blue
Collar

464,047

—

P2P

—

22,088

Total
Revenue

$2,589,931

$439,229

TPT SpeedConnect: ISP and Telecom Revenue

TPT
SpeedConnect is a rural BWA provider operating in 10 Midwestern
States under the trade name SpeedConnect. TPT SC’s primary
business model is subscription based, pre-paid monthly reoccurring
revenues, from wireless delivered, high-speed internet connections.
In addition, the company resells third-party satellite and DSL
internet and IP telephony services. Revenue generated from sales of
telecommunications services is recognized as the transaction with
the customer is considered closed and the customer receives and
accepts the services that were the result of the transaction. Due
date is detailed on monthly invoices distributed to customer.
Services billed monthly in advance are deferred to the proper
period as needed. Certain of our products require specialized
installation and equipment. For telecom products that include
installation, if the installation meets the criteria to be
considered a separate element, product revenue is recognized upon
delivery, and installation revenue is recognized when the
installation is complete. The Installation Technician collects the
signed quote containing terms and conditions when installing the
site equipment at customer premises.

Revenue
for installation services and equipment is billed separately from
recurring ISP and telecom services, and is recognized when
equipment is delivered and installation is completed. Revenue from
ISP and telecom services is recognized monthly over the contractual
period, or as services are rendered and accepted by the
customer.

The
overwhelming majority of our revenue continues to be recognized
when transactions occur. Since installation fees are generally
small relative to the size of the overall contract and because most
contracts are for two years or less, the impact of not recognizing
installation fees over the contract is immaterial.

Copperhead Digital: ISP and Telecom Revenue

Copperhead
Digital is a regional internet and telecom services provider
operating in Arizona under the trade name Trucom. Copperhead
Digital operates as a wireless telecommunications Internet Service
Provider (“ISP”) facilitating both residential and
commercial accounts. Copperhead Digital’s primary business
model is subscription based, pre-paid monthly reoccurring revenues,
from wireless delivered, high-speed internet connections. In
addition, the company resells third-party satellite and DSL
internet and IP telephony services. Revenue generated from sales of
telecommunications services is recognized as the transaction with
the customer is considered closed and the customer receives and
accepts the services that were the result of the transaction. Due
date is detailed on monthly invoices distributed to customer.
Services billed monthly in advance are deferred to the proper
period as needed. Certain of our products require specialized
installation and equipment. For telecom products that include
installation, if the installation meets the criteria to be
considered a separate element, product revenue is recognized upon
delivery, and installation revenue is recognized when the
installation is complete. The Installation Technician collects the
signed quote containing terms and conditions when installing the
site equipment at customer premises.

Revenue
for installation services and equipment is billed separately from
recurring ISP and telecom services, and is recognized when
equipment is delivered and installation is completed. Revenue from
ISP and telecom services is recognized monthly over the contractual
period, or as services are rendered and accepted by the
customer.

The
overwhelming majority of our revenue continues to be recognized
when transactions occur. Since installation fees are generally
small relative to the size of the overall contract and because most
contracts are for a year or less, the impact of not recognizing
installation fees over the contract is immaterial.

10

K Telecom: Prepaid Phones and SIM Cards Revenue

K
Telecom generates revenue from reselling prepaid phones, SIM cards,
and rechargeable minute traffic for prepaid phones to its customers
(primarily retail outlets). Product sales occur at the
customer’s locations, at which time delivery occurs and cash
or check payment is received. The Company recognizes the revenue
when they receive payment at the time of
delivery.

SDM: Ecommerce, Email Marketing and Web Design
Services

SDM
generates revenue by providing ecommerce, email marketing and web
design solutions to small and large commercial businesses, complete
with monthly software support, updates and maintenance. Services
are billed monthly. Platform infrastructure support is a prepaid
service billed in monthly recurring increments. The services are
billed a month in advance and due prior to services being rendered.
The revenue is deferred when invoiced and booked in the month the
service is provided. Software support services (including software
upgrades) are billed in real time, on the first of the month. Web
design service revenues are recognized upon completion of specific
projects. Revenue is booked in the month the services are rendered
and payments are due on the final day of the month.

Blue Collar: Media Production Services

Blue
Collar creates original live action and animated content
productions, and has produced hundreds of hours of material for the
television, theatrical, home entertainment and new media markets.
Blue Collar designs branding and marketing campaigns and has had
agreements with some of the world’s largest companies
including PepsiCo, Intel, HP, WalMart and many other Fortune 500
companies. Additionally, they create motion picture, television and
home entertainment marketing campaigns for studios including Sony,
DreamWorks, Twentieth Century Fox, Universal Studios, Paramount
Studios, and Warner Brothers. With regard to revenue recognition,
Blue Collar receives an agreement from each client to perform
defined work. Some agreements are written, some are verbal. Work
may include creation of marketing materials and/or content
creation. Some work may be short term and take weeks to create and
some work may be longer and take months to create. There are
instances where customer agreements segregate identifiable
obligations (like filming on site vs. film editing and final
production) with separate transaction pricing. The performance
obligation is generally satisfied upon delivery of such film or
production products, at which time revenue is
recognized.

P2P Asset Activity: Telecom Revenue

Port 2
Port Communications (P2P) is a U.S. domestic minutes provider that
sells wholesale long distance domestic telecom minutes to other
domestic U.S. carriers. A service is defined as wholesale telecom
minute based on a per-minute and per-destination rate basis. A
series of services for P2P would be substantially the same and
would include a pattern of transfers of services to a customer on a
per-minute flat rate basis for all destinations in a specified
geographic. Revenue generated from sales of minute services are
recognized when weekly invoices are generated and
distributed.

Basic
and Diluted Net Loss Per Share

The
Company computes net income (loss) per share in accordance with ASC
260, “Earning per Share””. ASC 260 requires
presentation of both basic and diluted earnings per share
(“EPS”) on the face of thee income statement. Basic EPS
is computed by dividing net income (loss) available to common
shareholder (numerator) by the weighted average number of shares
outstanding (denominator) during the period. Diluted EPS gives
effect to all dilutive potential common shares outstanding during
the period using the treasury stock method and convertible
preferred stock using the if-converted method. In computing diluted
EPS, the average stock price for the period is used in determining
the number of shares assumed to be purchased from the exercise of
stock options or warrants. Diluted EPS excludes all dilutive
potential shares if their effect is anti-dilutive. As of June 30,
2019, the Company had shares that were potentially common stock
equivalents as follows:

2019

Series A Preferred
Stock

128,056,506

Series B Preferred
Stock

2,588,693

Stock Options and
Warrants

6,426,453

Convertible
Debt

95,575,070

232,646,721

Financial
Instruments and Fair Value of Financial Instruments

Our
primary financial instruments at June 30, 2019 and December 31,
2018 consisted of cash equivalents, accounts receivable, accounts
payable, notes payable and derivative liabilities. We apply fair
value measurement accounting to either record or disclose the value
of our financial assets and liabilities in our financial
statements. Fair value is defined as the exchange price that would
be received for an asset or paid to transfer a liability (an exit
price) in the principal or most advantageous market for the asset
or liability in an orderly transaction between market participants
on the measurement date. A fair value hierarchy requires an entity
to maximize the use of observable inputs, where available, and
minimize the use of unobservable inputs when measuring fair
value.

11

Described below are
the three levels of inputs that may be used to measure fair
value:

Level 2 Observable inputs other
than Level 1 prices, such as quoted prices for similar assets
or liabilities; quoted prices in markets that are not active; or
other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the
assets or liabilities.

Level 3 Unobservable inputs that
are supported by little or no market activity and that are
significant to the fair value of the assets or
liabilities.

We
consider our derivative financial instruments as Level 3. The
balances for our derivative financial instruments as of June 30,
2019 are the following:

Derivative
Instrument

Fair
Value

Fair
value of Geneva Roth Convertible Promissory Notes

$302,523

Fair
value of Auctus Convertible Promissory Note

$ 7,767,966

Fair
value of Odyssey Capital Convertible Promissory Note

$ 788,984

Fair value of EMA
Financial Convertible Promissory Note

$651,837

Fair
value of JSJ Investment Convertible Promissory Note

$215,611

Fair
value of Warrants issued with the derivative
instruments

$109,980

Use
of Estimates

The
preparation of financial statements in conformity with United
States generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosures of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ materially from those
estimates. The Company’s consolidated financial statements
reflect all adjustments that management believes are necessary for
the fair presentation of their financial condition and results of
operations for the periods presented.

Recently
Adopted Accounting Pronouncements

In June
2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee
Share-Based Payment Accounting, which amends ASC 718, Compensation
– Stock Compensation. This ASU requires that most of the
guidance related to stock compensation granted to employees be
followed for non-employees, including the measurement date,
valuation approach, and performance conditions. The expense is
recognized in the same period as though cash were paid for the good
or service. The effective date is the first quarter of fiscal year
2019, with early adoption permitted, including in interim periods.
The ASU has been adopted using a modified-retrospective transition
approach. The adoption is not considered to have a material effect
on the consolidated financial statements.

In
February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) and
subsequent amendments to the initial guidance: ASU 2017-13, ASU
2018-10, ASU 2018-11, ASU 2018-20 and ASU 2019-01 (collectively,
Topic 842). Topic 842 requires lessees to classify leases as either
finance or operating leases and to record a right-of-use asset and
a lease liability for all leases with a term greater than 12 months
regardless of the lease classification. We adopted Topic 842 using
the effective date, January 2019, as the date of our initial
application of the standard. Consequently, financial information
for the comparative periods has not been updated. Our finance and
operating lease commitments are subject to the new standard and we
recognize as finance and operating lease liabilities and
right-of-use assets. The effect on our condensed consolidated
financial statements has not been material until we acquired the
assets of SpeedConnect, which effect has been recorded during the
period ended June 30, 2019 and is reflected in the condensed
consolidated financial statements as of June 30, 2019.

Management
has reviewed other recently issued accounting pronouncements and
have determined there are not any that would have a material impact
on the condensed consolidated financial statements.

12

NOTE
2 – ACQUISITIONS

TPT SpeedConnect, LLC Asset Acquisition

SpeedConnect Asset Acquisition

Effective April 2, 2019, the Company entered into an Asset Purchase
Agreement with SpeedConnect, LLC (“SpeedConnect”) to
acquire substantially all of the assets of SpeedConnect. On May 7,
2019, the Company closed the transaction underlying the Asset
Purchase Agreement with SpeedConnect to acquire substantially all
of the assets of SpeedConnect for $2 million and the assumption of
certain liabilities. The Asset Purchase Agreement required a
deposit of $500,000 made in April and an additional $500,000
payment to close. The additional $500,000 was paid and all other
conditions were met to effectuate the sale of substantially all of
the assets of SpeedConnect to the Company. As part of the closing,
the Company entered into a Promissory Note to pay SpeedConnect
$1,000,000 in two equal installments of $500,000 plus applicable
interest at 10% per annum with the first installment payable within
30 days of closing and the second installment payable within 60
days of closing (but no later than July 6, 2019). The Company paid
off the Promissory Note by June 11, 2019 and by amendment dated May
7, 2019, SpeedConnect forgave $250,000 of the Promissory Note. The
Company is required to have SpeedConnect’s financial
information audited for the last two years.

The
Company applied the acquisition method of accounting to the
business combination and has valued each of the assets acquired and
liabilities on a provisional basis primarily because the valuation
of the assets acquired has not yet been finalized, there
could be a material adjustment. Accordingly, the
assets and liabilities were deemed to be recorded at fair value on
a provisional basis as of the acquisition date of May 7,
2019.

Provisional
Purchase Price Allocation:

TPT
Global Tech

Effective

May 7, 2019

Purchaser

TPT Global
Tech

Provisional
Consideration Given:

Liabilities:

Cash
paid

$ 1,000,000

Promissory
Note

750,000

Deferred
revenue

258,188

Accounts
and other payables

653,824

Total Consideration
Value

$2,662,013

Provisional Assets
Acquired:

Assets

Customer
base

$400,000

Current
assets:

Prepaid
and other receivables

246,823

Deposits

13,190

Property
and equipment

1,939,000

Total Assets
Acquired

$2,599,013

Goodwill –
provisional

$63,000

13

Had the
acquisition occurred on January 1, 2018, the condensed
proforma statement of operations for the six months ended June 30,
2019 and 2018 would be as follows:

2019

2018

Revenue

$ 7,352.758

$ 9,101,507

Cost of
Sales

4,754,166

5,171,840

Gross
Profit

$ 2,598,592

$ 3,929,667

Expenses

4.514,097

(4,423,743)

Interest Expense
and Impairment

9,383,339

(78,541)

Income
Taxes

—

—

Net
Loss

$ 11,298,844

$ (572,617)

Earnings
(loss) per share

$ (0.08)

$ (0.00)

The
unaudited proforma results of operations are presented for
information purposes only. The unaudited proforma results of
operations are not intended to present actual results that would
have been attained had the asset acquisition been completed as of
January 1, 2019 or to project potential operating results as of any
future date or for any future periods. The revenue and net income
before non-controlling interest of SpeedConnect since May 7, 2019
acquisition date through June 30, 2019 included in the consolidated
income statement amounted to $1,946,820 and $186,725,
respectively.

NOTE
3 – GOING CONCERN

The
accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going
concern.

Cash
flows generated from operating activities were not enough to
support all working capital requirements for the six months ended
June 30, 2019 and 2018. Financing activities described below have
helped with working capital and other capital requirements. We
incurred $11,525,157 and $2,025,786, respectively, in
losses, and we used $1,082,208 and $635,176, respectively, in cash
for operations for the six months ended June 30, 2019 and 2018.
Cash flows from financing activities were $2,151,897 and $632,916
for the same periods. These factors raise substantial doubt about
the ability of the Company to continue as a going concern for a
period of one year from the issuance of these financial statements.
The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

We
acquired the assets of SpeedConnect on May 7, 2019 for $1,000,000
and a note payable for $750,000. These assets were conveyed into a
wholly owned subsidiary, TPT SpeedConnect. Although TPT
SpeedConnect is currently generating cash flows, there is expected
to be significant capital required in the near term to upgrade the
current network to 5G standards.

In
order for us to continue as a going concern for a period of one
year from the issuance of these financial statements, we will need
to obtain additional debt or equity financing and look for
companies with cash flow positive operations that we can acquire.
There can be no assurance that we will be able to secure additional
debt or equity financing, that we will be able to acquire cash flow
positive operations, or that, if we are successful in any of those
actions, those actions will produce adequate cash flow to enable us
to meet all our future obligations. Most of our existing financing
arrangements are short-term. If we are unable to obtain additional
debt or equity financing, we may be required to significantly
reduce or cease operations.

14

NOTE 4 – PROPERTY AND EQUIPMENT

Property
and equipment and related accumulated depreciation as of June 30,
2019 and December 31, 2018 are as follows:

2019

2018

Property and
equipment:

Telecommunications
fiber and equipment

$5,213,045

$3,274,045

Film production
equipment

369,903

369,903

Office furniture
and equipment

82,014

82,104

Leasehold
improvements

18,679

18,679

5,683,641

3,744,641

Accumulated
depreciation

(897,406)

(697,699)

Property and
equipment, net

$4,786,235

$3,046,942

Depreciation
expense was $199,707 and $87,746 for the six months ended June 30,
2019 and 2018, respectively.

NOTE
5 – DEBT FINANCING ARRANGEMENTS

Financing
arrangements as of June 30, 2019 and December 31, 2018 are as
follows:

2019

2018

Restated

Business loans and
advances, net of discounts (1)

$1,574,322

$615,692

Convertible notes
payable, net of discounts (2)

976,601

15,000

Factoring agreement
(3)

101,244

101,244

Debt – third
party

$2,652,167

$731,936

Line of credit,
related party secured by assets (4)

$3,043,390

$3,043,390

Debt– other
related party, net of discounts (5)

5,950,000

5,912,898

Convertible debt
– related party (2)

913,381

801,888

Shareholder debt
(6)

468,957

181,694

Debt –
related party

$10,375,728

$9,939,870

Total financing
arrangements

$13,027,895

$10,671,806

Less current
liabilities:

Business
loans, advances and agreements

$(1,675,566)

$(716,936)

Convertible notes
payable, net of discount

(976,601)

(10,000)

Notes
payable – related parties, net of discount

(9,462,347)

(9,137,982)

Convertible
notes payable – related party

(172,881)

(202,688)

(12,287,395)

(10,067,606)

Total non-current
liabilities

$740,500

$604,200

(1)
The terms of $40,000 of this balance are similar to that of the
Line of Credit which bears interest at adjustable rates, 1 month
Libor plus 2%, 4.4% as of June 30, 2019, and is secured by assets
of the Company, is due August 31, 2019, as amended, and included
8,000 stock options as part of the terms (see Note
7).

15

$500,500
is a line of credit that Blue Collar has with a bank, bears
interest at Prime plus 1.125%, 6.755% as of June 30, 2019, and is
due March 25, 2021.

$500,000
is a bank loan dated May 28, 2019 which bears interest at Prime
plus 6%, 11.5% as of June 30, 2019, is interest only for the first
year, thereafter payable monthly of principal and interest until
the due date of May 1, 2022. The bank loan is collateralized by
assets of the Company.

$10,000
is an amount the bears interest at 6%, subsequently increased to
11%, as it was due and not repaid on October 10, 2018. The
remaining balances generally bear interest at approximately 10%,
have maturity dates that are due on demand or are past due, are
unsecured and are classified as current in the balance
sheets.

(2)
During 2017, the Company issued convertible promissory notes in the
amount of $67,000 (comprised of $62,000 from two related parties
and $5,000 from a former officer of CDH), all which are due May 1,
2020 and bear 6% annual interest (12% default interest rate). The
convertible promissory notes are convertible, as amended, at $0.25
per share.

During
2016, the Company acquired SDM which consideration included a
convertible promissory note for $250,000 due August 31, 2018, as
amended, does not bear interest, unless delinquent in which the
interest is 12% per annum, and is convertible into common stock at
$1.00 per share. The SDM balance is $172,881 as of June 30,
2019.

During
2018, the Company issued convertible promissory notes in the amount
of $537,200 to related parties and $10,000 to a non-related party
which bear interest at 6% (11% default interest rate), are due 30
months from issuance and are convertible into Series C Preferred
Stock at $1.00 per share. During 2019, the Company issued these
same securities with the same terms in the amount of $141,300 to
related parties. Because the Series C Preferred Stock has a
conversion price of $0.15 per share, the issuance of Series C
Preferred Stock promissory notes will cause a beneficial conversion
feature of approximately $38,479 upon exercise of the convertible
promissory notes.

During
2019, the Company consummated Securities Purchase Agreements dated
March 15, 2019, April 12, 2019, May 15, 2019 and June 6,
2019 with Geneva Roth Remark Holdings, Inc. (“Geneva
Roth”) for the purchase of convertible promissory notes
in the amounts of $68,000, $65,000, $58,000 and $53,000
(“Geneva Roth Convertible Promissory Notes”). The
Geneva Roth Convertible Promissory Notes are due one year from
issuance, pays
interest at the rate of 12% per annum
and gives the
holder the right from time to time, and at any time during the period beginning
180 days from the origination
date to the maturity date or date
of default to
convert all or any part of the outstanding
balance into common stock of the Company limited to 4.99% of the
outstanding common stock of the Company. The conversion price is
61% multiplied by the average of the two lowest trading
prices for the common stock during the previous
20 trading days prior to the applicable
conversion date. The Geneva Roth Convertible
Promissory Notes may be prepaid in whole or in part of the
outstanding balance at 125% to 140% up to 180 days from
origination. Subsequent to June 30, 2019, all of the $68,000
Convertible Promissory Note was converted to 4,203,632 common
shares in accordance with the Geneva Roth Securities Purchase
Agreement.

On March 25, 2019, the Company consummated a
Securities Purchase Agreement dated March 18, 2019 with Auctus
Fund, LLC. (“Auctus”) for the purchase of a $600,000
($1,235,507 under default calculations) Convertible Promissory Note
(“Auctus Convertible Promissory Note”). The Auctus
Convertible Promissory Note is due December 18, 2019, pays interest
at the rate of 12% (24% default) per annum and gives the holder the
right from time to time, and at any time during the period
beginning 180 days from the origination date or at the effective
date of the registration of the underlying shares of common stock,
which the holder has registration rights for, to convert all of the
outstanding balance into common stock of the Company limited to
4.99% of the outstanding common stock of the Company. The
conversion priceis the lessor
of the lowest trading price during the previous 25 trading days
prior the date of the Auctus Convertible Promissory Note or 50%
multiplied by the average of the two lowest trading prices for the
common stock during the previous 25 trading days prior to the
applicable conversion date. The Auctus Convertible Promissory Note
may be prepaid in full at 135% to 150% up to 180 days from
origination. 2,000,000 warrants were issued in conjunction with the
issuance of this debt. See Note 7. Subsequent to June 30, 2019,
Auctus converted $24,280 of accrued interest into 2,500,000 common
shares in accordance with the Auctus Securities Purchase
Agreement.

On
June 4, 2019, the Company consummated a Securities Purchase
Agreement with Odyssey Capital Funding, LLC.
(“Odyssey”) for the purchase of a $525,000 Convertible
Promissory Note (“Odyssey Convertible Promissory
Note”). The Odyssey Convertible Promissory Note is due June
3, 2020, pays interest at the rate of 12% (18% default) per annum
and gives the holder the right from time to time, and at any time
during the period beginning six months from the issuance date to
convert all of the outstanding balance into common stock of the
Company limited to 4.99% of the outstanding common stock of the
Company. The conversion price is 55% multiplied by the average of
the two lowest trading prices for the common stock during the
previous 20 trading days prior to the applicable conversion date.
The Odyssey Convertible Promissory Note may be prepaid in full at
125% to 145% up to 180 days from origination.

On
June 6, 2019, the Company consummated a Securities Purchase
Agreement with JSJ Investments Inc. (“JSJ”) for the
purchase of a $112,000 Convertible Promissory Note (“JSJ
Convertible Promissory Note”). The JSJ Convertible Promissory
Note is due June 6, 2020, pays interest at the rate of 12% per
annum and gives the holder the right from time to time, and at any
time during the period beginning 180 days from the origination date
to convert all of the outstanding balance into common stock of the
Company limited to 4.99% of the outstanding common stock of the
Company. The conversion price is the lower of the market price, as
defined, or 55% multiplied by the average of the two lowest trading
prices for the common stock during the previous 20 trading days
prior to the applicable conversion date. The JSJ Convertible
Promissory Note may be prepaid in full at 135% to 150% up to 180
days from origination. 333,333 warrants were issued in conjunction
with the issuance of this debt. See Note 7.

16

On June 11, 2019, the Company consummated a
Securities Purchase Agreement with EMA Financial, LLC.
(“EMA”) for the purchase of a $250,000 Convertible
Promissory Note (“EMA Convertible Promissory Note”).
The EMA Convertible Promissory Note is due June 11, 2020, pays
interest at the rate of 12% per annum and gives the holder the
right from time to time to convert all of the outstanding balance
into common stock of the Company limited to 4.99% of the
outstanding common stock of the Company. The conversion price is
55% multiplied by the lowest traded price for the common stock
during the previous 25 trading days prior to the applicable
conversion date. The EMA Convertible Promissory Note may be prepaid
in full at 135% to 150% up to 180 days from origination. 1,000,000
warrants were issued in conjunction with the issuance of this debt.
See Note 7.

The
Company may be in default under several of its new derivative
financial instruments for not having filed a Form S-1 with the
Securities and Exchange Commission by now. It is the intent of the
Company to payback all derivative securities prior to December 31,
2019 and is in negotiation for a term loan to do so. In addition,
the Company is in negotiation to not have to file a Form 10Q for
certain underlying shares of common stock for warrants that were
issued with the derivative securities. Otherwise, the Company may
have to file a Form S-1 to register these underlying common shares
and has accounted for both the Auctus and Odyssey derivative
financial instruments as if they were in default at June 30, 2019.
Do this included an adjustment of $635,507 to the derivative debt
principal balances and $10,033 to the related accrued interest
balances as of June 30, 2019 included as a part of the restatement.
See Note 12.

(3)
One Factoring Agreement with full recourse, due August 31, 2019, as
amended, was established in June 2016 with a company that is
controlled by a shareholder and is personally guaranteed by an
officer of the Company. The Factoring Agreement is such that the
Company pays a discount of 2% per each 30-day period for each
advance received against accounts receivable or future billings.
The Company was advanced funds from the Factoring Agreement for
which $101,244 in principal remained unpaid as of June 30, 2019 and
December 31, 2018.

Another
factoring agreement was entered into dated May 8, 2019 with
Advantage Capital Funding. $500,000 was actually funded to the
Company with a promise to pay $18,840 per week for 40 weeks until a
total of $753,610 is paid. $656,712 remains outstanding under this
factoring agreement as of June 30, 2019.

(4)
The Line of Credit originated with a bank and was secured by the
personal assets of certain shareholders of Copperhead Digital.
During 2016, the Line of Credit was assigned to the Copperhead
Digital shareholders, who subsequent to the Copperhead Digital
acquisition by TPTG became shareholders of TPTG, and the secured
personal assets were used to pay off the bank. The Line of Credit
bears a variable interest rate based on the 1 Month LIBOR plus
2.0%, 4.4% as of June 30, 2019, is payable monthly, and is secured
by the assets of the Company. 1,000,000 shares of Common Stock of
the Company have been reserved to accomplish raising the funds to
pay off the Line of Credit. Since assignment of the Line of Credit
to certain shareholders, which balance on the date of assignment
was $2,597,790, those shareholders have loaned the Company $445,600
under the similar terms and conditions as the line of credit but
most of which were also given stock options totaling 85,120 (see
Note 7) and is due, as amended, August 31,
2019.

During
the year ended December 31, 2018, these same shareholders and one
other loaned the Company money in the form of convertible loans of
$537,200 described in (2) above.

(5)
$350,000 represents cash due to the prior owners of the technology
acquired in December 2016 from the owner of the Lion Phone which is
due to be paid as agreed by TPTG and the former owners of the Lion
Phone technology and has not been determined.

$4,000,000
represents a promissory note included as part of the consideration
of ViewMe Live technology acquired in 2017, later agreed to as
being due and payable in full, with no interest with $2,000,000
from debt proceeds and the remainder from proceeds from the second
Company public offering intended to be in 2019.

On
September 1, 2018, the Company closed on its acquisition of Blue
Collar. Part of the acquisition included a promissory note of
$1,600,000 (fair value of $1,533,217, net of a discount to fair
value of $66,783 which is being amortized through expense through
the due date of May 1, 2019) and interest at 3% from the date of
closure. $37,102 was amortized as interest expense in the six
months ended June 30, 2019. The promissory note is secured by the
assets of Blue Collar.

(6)
The shareholder debt represents funds given to TPTG or subsidiaries
by officers and managers of the Company as working capital. There
are no written terms of repayment or interest that is being accrued
to these amounts and they will only be paid back, according to
management, if cash flows support it. They are classified as
current in the balance sheets.

During
the six months ended June 30, 2019, the Company borrowed $50,000
from a related party for working capital with no written terms.
This was paid back prior to June 30, 2019 with $7,000 representing
interest on the funds.

Note 6 - Derivative Financial Instruments

The Company previously adopted the provisions of ASC subtopic
825-10, Financial
Instruments (“ASC
825-10”). ASC 825-10 defines fair value as the price that
would be received from selling an asset or paid to transfer a
liability in an orderly transaction between market participants at
the measurement date. When determining the fair value measurements
for assets and liabilities required or permitted to be recorded at
fair value, the Company considers the principal or most
advantageous market in which it would transact and considers
assumptions that market participants would use when pricing the
asset or liability, such as inherent risk, transfer restrictions,
and risk of nonperformance. ASC 825-10 establishes a fair value
hierarchy that requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring
fair value.

17

The derivative liability as of June 30, 2019, in the amount of
$9,836,901 has a level 3 classification under ASC
825-10.

The following table provides a summary of changes in fair value of
the Company’s Level 3 financial liabilities as of June 30,
2019. There were no derivative financial instruments as of December
31, 2018.

Debt Derivative Liabilities

Balance, December
31, 2018

$—

Debt discount from
initial derivative

1,731,000

Initial fair value
of derivative liabilities

2,592,736

Change in fair
value of derivative liabilities at end of period

5,513,565

Balance, June 30,
2019

$9,836,901

Derivative expense
for the six months ended June 30, 2019

$8,105,901

Convertible notes payable and
warrant derivatives – The Company issued convertible promissory notes
which are convertible into common stock, at holders’ option,
at a discount to the market price of the Company’s common
stock. The Company has identified the embedded derivatives related
to these notes relating to certain anti-dilutive (reset)
provisions. These embedded derivatives included certain conversion
features. The accounting treatment of derivative financial
instruments requires that the Company record fair value of the
derivatives as of the inception date of debenture and to fair value
as of each subsequent reporting date.

As
of June 30, 2019, the Company marked to market the fair value of
the debt derivatives and determined a fair value of
$9,726,921 ($9,726,921 from the convertible notes and
$109,980 from the warrants) in Note 5 (2) above. The
Company recorded a loss from change in fair value of debt
derivatives of $5,513,565 for the six months ended
June 30, 2019. The fair value of the embedded derivatives was
determined using Monte Carlo simulation method based on the
following assumptions: (1) dividend yield of 0%, (2) expected
volatility of 188.2% to 212.8%, (3) weighted average risk-free
interest rate of 2.23% to 2.52% (4) expected life of 0.72 to 5.0
years, and (5) the quoted market price of $0.0531 to $0.0726 for
the Company’s common stock.

See
Financing lease arrangements in Note 8.

NOTE
7 - STOCKHOLDERS' DEFICIT

Preferred
Stock

As of
June 30, 2019, we had authorized 100,000,000 shares of Preferred
Stock, of which certain shares had been designated as Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock.

Series
A Convertible Preferred Stock

In
February 2015, the Company designated 1,000,000 shares of Preferred
Stock as Series A Preferred Stock.

The
Series A Preferred Stock was designated in February 2016, has a par
value of $.001, is redeemable at the Company’s option at $100
per share, is senior to any other class or series of outstanding
Preferred Stock or Common Stock and does not bear dividends. The
Series A Preferred Stock has a liquidation preference immediately
after any Senior Securities, as defined, and amended,
of an amount equal to amounts payable owing, including
contingency amounts where Holders of the Series A have personally
guaranteed obligations of the Company. Holders of the Series
A Preferred Stock shall, collectively have the right to convert all
of their Series A Preferred Stock when conversion is elected into
that number of shares of Common Stock of the Company, determined by
the following formula: 60% of the issued and outstanding Common
Shares as computed immediately after the transaction for
conversion. For further clarification, the 60% of the issued and
outstanding common shares includes what the holders of the Series A
Preferred Stock may already hold in common shares at the time of
conversion. The Series A Preferred Stock, collectively, shall have
the right to vote as if converted prior to the vote to an amount of
shares equal to 60% of the outstanding Common Stock of the
Company.

In
February 2015, the Board of Directors authorized the issuance of
1,000,000 shares of Series A Preferred Stock to Stephen Thomas,
Chairman, CEO and President of the Company, valued at $3,117,000
for compensation expense.

18

Series
B Convertible Preferred Stock

In
February 2015, the Company designated 3,000,000 shares of Preferred
Stock as Series B Convertible Preferred Stock. There are 2,588,693
shares of Series B Convertible Preferred Stock outstanding as of
June 30, 2019.

The
Series B Preferred Stock was designated in February 2015, has a par
value of $.001, is not redeemable, is senior to any other class or
series of outstanding Preferred Stock, except the Series A
Preferred Stock, or Common Stock and does not bear dividends. The
Series B Preferred Stock has a liquidation preference immediately
after any Senior Securities, as defined and currently the Series A
Preferred Stock, and of an amount equal to $2.00 per share. Holders
of the Series B Preferred Stock have a right to convert all or any
part of the Series B Preferred Shares and will receive and equal
amount of common shares at the conversion price of $2.00 per share.
The Series B Preferred Stockholders have a right to vote on any
matter with holders of Common Stock and shall have a number of
votes equal to that number of Common Shares on a one to one
basis.

Series
C Convertible Preferred Stock

In May
2018, the Company designated 3,000,000 shares of Preferred Stock as
Series C Convertible Preferred Stock. There are no shares of Series
C Convertible Preferred Stock outstanding as of June 30,
2019.

The
Series C Preferred Stock was designated in May 2018, has a par
value of $.001, is not redeemable, is senior to any other class or
series of outstanding Preferred Stock, except the Series A and
Series B Preferred Stock, or Common Stock and does not bear
dividends. The Series C Preferred Stock has a liquidation
preference immediately after any Senior Securities, as defined and
currently the Series A and B Preferred Stock, and of an amount
equal to $2.00 per share. Holders of the Series C Preferred Stock
have a right to convert all or any part of the Series C Preferred
Shares and will receive an equal amount of common shares at the
conversion price of $0.15 per share. The Series C Preferred
Stockholders have a right to vote on any matter with holders of
Common Stock and shall have a number of votes equal to that number
of Common Shares on a one to one basis.

Common
Stock and Capital Contributions

As of
June 30, 2019, we had authorized 1,000,000,000 shares of Common
Stock, of which 136,953,904 common shares are issued and
outstanding.

Common Stock Contributions Related to Acquisitions

Effective November
1 and 3, 2017, an officer of the Company contributed 9,765,000
shares of restricted Common Stock to the Company for the
acquisition of Blue Collar and HRS. These shares were subsequently
issued as consideration for these acquisitions in November 2017. In
March 2018, the HRS acquisition was rescinded and 3,625,000 shares
of common stock are being returned by the recipients. The other
transaction involved 6,500,000 shares for the acquisition of Blue
Collar which closed in 2018. As such, as of June 30, 2019 the
3,265,000 shares for the HRS transaction are reflected as
subscriptions receivable based on their par value.

Common Stock Issued for Expenses and Liabilities

During
the year ended December 31, 2018, the Company entered into a
two-year agreement for legal services. The agreement provided for
4,000,000 shares of restricted common stock to be issued. 2,000,000
to be issued for previous legal services upon execution of the
agreement in March 2018 and the remaining 2,000,000 in the form of
stock options to purchase common stock at $0.10 per share, of which
the stock options would vest equally over 18 months. The value of
the Company’s common stock upon execution of the agreement
was $0.125 per share, or $250,000 which was recorded as
professional expenses during 2018. See stock options and warrants
discussion below for the value of the 2,000,000 stock
options.

During
the year ended December 31, 2018, the Company also entered into a
twelve-month general consulting agreement with a third party to
provide general business advisory services to be rendered through
June 30, 2019 for 1,000,000 restricted shares of common stock and
1,000,000 options to purchase restricted common shares at $0.10 per
share for 36 months from the time of grant. The fair value of the
common shares granted was based on the Company’s stock price
of $0.155 per share, or $155,000 of which $34,444 was expensed
during the six months ended June 30, 2019 for the portion of
service term completed during this period.

For
these two agreements, the underlying stock for the stock options
are intended to come from the contribution of stock by an officer
of the Company. During the six months ended June 30, 2019, the
Company recorded $203,126 as stock-based compensation related to
these agreements.

Common Stock Payable Issued for Expenses and
Liabilities

As of
June 30, 2019, 16,667 of common shares were subscribed to in 2018
for a note payable of $2,000.

19

In 2018, a majority of the outstanding voting shares of the Company
voted through a consent resolution to support a consent resolution
of the Board of Directors of the Company to add two new directors
to the Board. As such, Arkady Shkolnik and Reginald Thomas (family
member of CEO) were added as members of the Board of Directors. The
total members of the Board of Directors after this addition is
four. In accordance with agreements with the Company for his
services as a director, Mr. Shkolnik is to receive $25,000 per
quarter and 5,000,000 shares of restricted common stock valued at
approximately $692,500 vesting quarterly over twenty-four months.
The quarterly cash payments of $25,000 will be paid in unrestricted
common shares if the Company has not been funded adequately to make
such payments. Mr. Thomas is to receive $10,000 per quarter and
1,000,000 shares of restricted common stock valued at approximately
$120,000 vesting quarterly over twenty-four months. The quarterly
payment of $10,000 may be suspended by the Company if the Company
has not been adequately funded. As of June 30, 2019, $72,500 and
$20,000 has been accrued in the balance sheet for Mr. Shkolnik and
Mr. Thomas, respectively.

Stock Options

Options
Outstanding

Vested

Vesting
Period

Exercise Price
Outstanding and Exercisable

Expiration
Date

December 31,
2017

93,120

93,120

100% at
issue

$0.05 to
$0.22

12-31-19

Granted

3,000,000

—

12 to 18
months

$0.10

2-28-20 to
3-20-21

December 31,
2018

3,093,120

1,954,230

$0.05 to
$0.22

12-31-19 to
3-20-21

Granted

—

June 30,
2018

3,093,120

2,176,453

$0.05 to
$0.22

12-31-19 to
3-20-21

Stock
options to purchase approximately 3,093,120 shares of common stock
of the Company are outstanding as of June 30, 2019 related to debt
issuances (see Note 5) at prices ranging from $0.05 to $0.22 per
share.

In
addition, the company granted through consulting arrangements
primarily for legal work and general business support that included
the issuance of stock options to purchase 3,000,000 options to
purchase common shares at $0.10 per share, 1,000,000 of which is
fully vested and 2,000,000 which will vest over 18 months from date
of grant. All these stock options have an exercise period of 24 to
36 months. The Black-Scholes options pricing model was used to
value the stock options. The inputs included the
following:

(1)

Dividend
yield of 0%

(2)

expected
annual volatility of 307% - 311%

(3)

discount
rate of 2.2% to 2.3%

(4)

expected
life of 2 years, and

(5)

estimated
fair value of the Company’s common $0.125 to $0.155 per
share.

During
the six months ended June 30, 2019, the Company recorded $113,488
as stock-based compensation related to the stock options and the
related service period for which services have been rendered. For
future periods, the remaining value of the stock options totaling
approximately $27,181 will be amortized into the statement of
operations consistent with the period for which the services will
be rendered, which is two years for the legal agreement and one
year for the general consulting agreement.

Common Stock Reservations

The
Company has reserved 1,000,000 shares of Common Stock of the
Company for the purpose of raising funds to be used to pay off debt
described in Note 5.

We have
reserved 20,000,000 shares of Common Stock of the Company to grant
to certain employee and consultants as consideration for services
rendered and that will be rendered to the Company.

Warrants

As part of the Convertible Promissory Notes issuance in Note 5, the
Company issued 3,333,333 warrants to purchase 3,333,333 common
shares of the Company at 70% of the current market price. Current
market price means the average of the three lowest trading
prices for our common stock during the ten-trading day period
ending on the latest complete trading day prior to the date of the
respective exercise notice. However, if a required registration
statement, registering the underlying shares of the Convertible
Promissory Notes, is declared effective on or before June 11, 2019
to September 11, 2019, then, while such Registration Statement is
effective, the current market price shall mean the lowest volume
weighted average price for our common stock during the ten-trading
day period ending on the last complete trading day prior to the
conversion date.

The
warrants issued were considered derivative liabilities valued at
$109,980 of the total $5,450,963 derivative liabilities as of June
30, 2019. See Note 5.

20

NOTE
8 - COMMITMENTS AND CONTINGENCIES

Accounts
Payable and Accrued Expenses as of June 30, 2019 and December 31,
2018:

2019

2018

Accounts
payable:

Related
parties (1)

$954,284

$741,577

General
operating

3,096,771

3,036,601

Credit
card balances

257,109

246,949

Accrued
interest on debt

472,731

306,319

Accrued
expenses

495,765

33,062

Taxes
and fees payable

631,857

629,462

Total

$5,908,516

$4,993,970

(1)

Relates
to amounts due to management and members of the Board of Directors
according to verbal and written agreements that have not been paid
as of period end.

Lease
Arrangements

We have various non-cancelable lease agreements for certain of our
tower locations with original lease periods expiring between 2019
and 2044. Our lease terms may include options to extend or
terminate the lease when it is reasonably certain we will exercise
that option. Certain of the arrangements contain escalating rent
payment provisions. Our Michigan main office lease and our two
other equipment leases that are in default and leases with an
initial term of twelve months have not been recorded on the
condensed consolidated balance sheets. We recognize rent expense on
a straight-line basis over the lease term.

Lease Cost –Actual lease
cost for the six months ended June 30, 2019 was
$450,626.

Summary
of future payments

$6,436,103

Discount

(1,054,923)

Net
Present Value

$5,381,180

Lease Term and Discount Rate -The weighted-average remaining lease term (in
years) and discount rate related to the operating leases were as
follows:

Weighted
average lease term

6
years

Discount
Rate

12%

Maturity of Lease Liabilities -The present value of our tower operating lease
liabilities as of June 30, 2019 were as
follows:

2019

2020

2021

2022

2023

Thereafter

Tower
Leases

$1,913,493

$1,466,659

$975,744

$630,800

$252,960

$141,525

21

Lease
obligations not included in the above calculations are as follows
as of June 30, 2019:

Obligation

2019

In
Default

Accrued

Interest

Total

Telecom Equipment
Finance (1)

$449,103

—

156,405

$605,508

Telecommunications
Equipment (2)

—

101,347

33,624

134,971

Production
Equipment Lease (3)

2,919

—

—

2,919

Total

$452,022

101,347

190,029

$743,398

(1) The
Telecom Equipment Lease is with an entity owned and controlled by
shareholders of the Company and is due August 31, 2019, as
amended.

(2) The
Telecommunications Equipment Lease requires payments of $3,702 per
month and is in default. See discussion below in Other Commitments
and Contingencies. In December 2017, the Company learned that the
telecommunications equipment lease identified herein for $101,348
was included in a default judgement in a non-jurisdictional state
of Pennsylvania for $169,474 from a lawsuit by the lessor.
Management is working with the lessor to settle this matter
including a proposal for the equipment to be returned to the lessor
and then a negotiated amount for any deficiency between the value
given for the retired equipment and the $101,348. When concluded,
management does not believe the results will be significantly
different than the liability of $101,348 and accrued fees and
interest of $38,110 recorded.

(3) The
Production Equipment Lease, maturing on April 15, 2019, required
payments of $2,535 per month and includes imputed interest at 8.5%.
The lease was entered into in 2015 for the purchase of equipment in
the amount of approximately $120,000.

Other
Commitments and Contingencies

The
Company has employment agreements with certain employees of SDM and
K Telecom. The agreements are such that SDM and K Telecom, on a
standalone basis in each case, must provide sufficient cash flow to
financially support the financial obligations within the employment
agreements.

In
December 2016, a subsidiary’s landlord agreed to terminate a
facilities lease for 150,000 restricted shares of Common Stock
valued at $43,350 from a capital contribution of an officer of the
Company. Subsequent to the agreement, the landlord requested more
shares against the Company’s agreement. As such, $63,053
remains in liabilities payable to the landlord and the $43,350 was
expensed as rent previously. The matter is still unresolved.
Management does not believe any negative resolution will have a
material impact on the Company’s consolidated financial
statements.

22

The
Company has been named in a lawsuit by a former employee who was
terminated by management in 2016. The employee was working under an
employment agreement but was terminated for breach of the
agreement. The former employee is suing for breach of contract and
is seeking around $75,000 in back pay and benefits. Management
believes it has good and meritorious defenses and does not believe
the outcome of the lawsuit will have any material effect on the
financial position of the Company.

As of
June 30, 2019, the Company has collected $338,725 from one customer
in excess of amounts due from that customer in accordance with the
customer’s understanding of the appropriate billings
activity. The customer has filed a written demand for repayment by
the Company of amounts owed. Management believes that the customer
agreement allows them to keep the amounts under dispute. Given the
dispute, the Company has reflected the amounts in dispute as a
customer liability on the consolidated balance sheet as of June 30,
2019 and does not believe the outcome of the dispute will have a
material effect on the financial position of the
Company.

NOTE
9 – RELATED PARTY ACTIVITY

The
Company entered into a lease for living space which is occupied by
Stephen Thomas, Chairman, CEO and President of the Company. Mr.
Thomas lives in the space and uses it as his corporate office. The
Company has paid $15,500 and $13,642 in rent and utility payments
for this space for the six months ended June 30, 2019 and 2018,
respectively.

There
are shares issuances and capital contributions from an officer of
the Company. See Note 7. Also, there are debt and lease balances
outstanding due to shareholders and other related parties of the
Company of $954,693 and $741,577, respectively, as of June 30, 2019
and December 31, 2018 related to amounts due to management and
members of the Board of Directors according to verbal and written
agreements that have not been paid as of period end which are
included in accounts payable and accrued expenses on the balance
sheet. See Notes 7 and 8.

As is
mentioned in Note 7, Reginald Thomas was appointed to the Board of
Directors of the Company in August 2018. Mr. Thomas is the brother
to the CEO Stephen J. Thomas III. According to an agreement with
Mr. Reginald Thomas, he is to receive $10,000 per quarter and
1,000,000 shares of restricted common stock valued at approximately
$120,000 vesting quarterly over twenty-four months. The quarterly
payment of $10,000 may be suspended by the Company if the Company
has not been adequately funded.

23

NOTE
10 – GOODWILL AND INTANGIBLE ASSETS

Goodwill and
intangible assets are comprised of the following:

June
30, 2019

Gross Carrying
Amount

Accumulated
Amortization

Net Book
Value

Useful
Life

Customer
Base

$2,347,200

(1,413,089)

934,111

3-10

Developed
Technology

$6,105,600

(1,398,272)

4,707,328

9

Film
Library

$957,000

(68,800)

888,200

11

Trademarks and
Tradenames

$132,000

(9,319)

122,681

12

$9,541,800

(2,889,480)

6,652,320

Goodwill

$987,361

—

987,361

—

Amortization
expense was $419,262 and $369,200 for the six months ended June 30,
2019 and 2018, respectively.

December
31, 2018

Gross Carrying
Amount

Accumulated
Amortization

Net Book
Value

Useful
Life

Customer
Base

$1,947,200

(1,374,933)

572,267

3-10

Developed
Technology

$6,105,600

(1,059,070)

5,046,530

9

Film
Library

$957,000

(32,700)

924,300

11

Trademarks and
Tradenames

$132,000

(3,515)

128,485

12

$9,141,800

(2,470,218)

6,671,582

Goodwill

$924,361

—

924,361

—

Remaining
amortization of the intangible assets as of June 30, 2019 is as
follows:

2019

2020

2021

2022

2023

Beyond

Customer
Base

$47,557

$103,455

$103,455

$103,455

$103,455

$472,734

Developed
Technology

339,202

678,404

678,404

678,404

678,404

1,654,510

Film
Library

50,900

87,000

87,000

87,000

87,000

489,300

Trademarks
and Tradenames

5,196

11,000

11,000

11,000

11,000

73,485

Total

$442,855

$879,859

$879,859

$879,859

$879,859

$2,652,320

NOTE
11 – SUBSEQUENT EVENTS

There
were no significant subsequent eventsthat have not been
disclosed in Notes 5, 6, 7 and 12.

During
the three months ended June 30, 2019, the Company failed to file a
Form S-1 registering common shares underlying certain convertible
debt instruments. This was considered a default under the
applicable Securities Purchase Agreements resulting in default
interest which in turn affected the related valuations of the
convertible debt instruments for accounting purposes as of June 30,
2019. Thus, liabilities as of June 30, 2019 were understated by
$5,142,119 and corresponding derivative expense and interest
expense were understated by $4,496,579 and $645,540,
respectively.

The
effects of the corrections on the interim consolidated financial
statements were as follows: